Crisis everywhere? China will be impacted too, and that will benefit European businesses. Valuations of local tech companies are going down here too (the bubble is over), and faster than the Euro is losing to the Chinese Yuan, so if you are in an expansion phase or have decent international ambitions (that includes China, stupid), it is now cheaper to invest in Chinese tech companies than before.
Besides, as some of these local companies (those geared towards export) feel the pinch of the contraction of global trade (unfortunately, thousands are being laid off here too), Chinese export-driven SMEs’ will be even more eager to partner with you –if you can open doors in Europe.
But wait, that’s not all. By now, you must have read (quite some press coverage actually) that Chinese telecom operators are reorganizing. What a mess, trust me, and what an opportunity too. China Telecom desperately looking for MVAS decent partners and new services to kick China Mobile’s butt when the time comes (which is soon, if we consider how fast a CDMA network can be upgraded to 2.75 and 3G speeds, and how poorly TD-SCDMA is currently performing). TD-SCDMA is the 3G standard deployed (against their will) by China Mobile. China Unicom, historically the black sheep of the industry, will also be a significant 3G and 3.5G player faster than you can imagine (piggy backing on WCDMA’s successful implementations around the world, accessing cheaper equipment and handsets).
In the mean time, mobile internet (80 millions subscribers according to latest government statistics) is coming of age, with users dying to get new apps optimized for low-speed and/or low-end phones (to our standards). Mobile streaming optimized for GPRS is becoming increasingly popular for example (yet, well behind music, gaming or e-paper, by far the most popular service offered by China Mobile) and CMMB (home-grown mobile TV standard) has passed the one million subscribers.
Oh, and I forgot… With over 250 million internet subscribers, an online ad market well beyond 2 Billion USD and e-commerce in a boom, you will have plenty more opportunities to have fun while you are here. Online payment is definitely part of the culture now (Alipay, China’s leading online payment platform, exceeded 100 millions users back in September) while local “ebays” called Taobao (and smaller size PaiPai from Tencent and eBay China) dominate the market by a 90% cumulated market share, which still leaves 6-8 Bil RMB (0.9 – 1.2 Bil USD) of a market for “classic” B2C players, which are mushrooming every day.
Margins are low (except for online diamond sellers, mind you) but volumes are high (a typical Chinese equation) and average spending is going up, so as long as you do your homework properly (take the time to come and meet local players, learn the intricacies of online/mobile marketing in China etc), you can successfully bring new ideas that will carve their niche in the local (mobile) internet scene. But don’t expect a one-year return on investment. China, like good wines, deserves time and a lot of attention.
About the author: Bruno Bensaid is the managing director of Shanghaivest Limited, a boutique financial advisory firm focused on M&A, raising funds and investing in Chinese TMT startups at seed/early stage level. Bruno is also the founder of the Shanghai Chapter of MobileMonday, the premier mobile industry community and mobile-centric event organizer worldwide. www.mobilemondayshanghai.net.